LOW-INCOME families should not be forced into “unsustainable debt”, the Bishop of Kensington, Dr Graham Tomlin, has said.

The Government’s Debt Respite Scheme will protect people with debt problems from action by creditors for 60 days. Government loans, however, including advance payments for Universal Credit claimants, are not currently included in the reprieve. Those who rely on such loans to cover their costs until their first payment from Universal Credit comes through, therefore, have no protection from creditors.

If it is approved by Parliament, the scheme will come into force on 4 May 2021.

Campaigners, including the Salvation Army and Christians Against Poverty (CAP), have expressed concern that those on low incomes may struggle to cover basic needs, including food and energy bills, while repaying benefit loans.

In a statement on Wednesday of last week, Dr Tomlin, vice-chair of the Archbishop of Canterbury’s Commission on Housing, Church and Community, spoke of the way in which “a growing number of private rented tenants face a difficult choice between not paying their rent and borrowing money they can’t afford to pay back.

“New Universal Credit claimants, in particular, are being encouraged to take out advances to pay their rent while they wait for their first payment, pushing them into debt and adding to the financial pressure on families that are already struggling to make ends meet.

“The Government has promised to include Universal Credit Advances in the Debt Respite Scheme to relieve the pressure on the most indebted families, and now we hope and trust they will deliver on this commitment.

“The Archbishop’s Housing Commission believes that housing should be stable, as well as safe, sustainable, sociable, and satisfying. This will only happen when we have an effective social-security system that enables low-income families to cover their housing costs without being forced into unsustainable debt.”

On Tuesday of last week, the social-policy manager for CAP, Rachel Gregory, expressed support for the inclusion of government loans in the Debt Respite Scheme, but said that the Government needed to do more to make this happen.

“We are strongly in favour of this. Throughout our conversations with the Government about the design of the scheme, we have stressed it is vital that all debts are included, so it provides complete protection and is effective at giving people release from the pressure of debt to seek help and advice. It is positive that the Government made clear they wanted to include as broad a range of debts as possible, and this includes Council Tax arrears,” she said.

“The government has said it is their ambition to include debts collected from Universal Credit payments, such as Advances, but that the IT development required cannot be completed ahead of the launch in May 2021. This is disappointing, and especially that the Government has set no date for when this will be completed and the regulations contain no reference to their ambition.”

In a report published on the Saturday before last, No One Left Behind, the Salvation Army said that on average, full-time workers can have levels of debt of more than £13,000. Debt levels of those who rent accommodation privately increased by 43 per cent during the pandemic.

The financial development inclusion manager for the Salvation Army, Lorraine Cook, said on Monday of last week: “It’s the very vulnerable we are most concerned about. The people queuing outside our foodbanks because they can no longer afford to eat are those most likely to rely on Universal Credit Advance Payments to get by. The moment someone has an unexpected payment like a boiler repair or a new pair of trainers for their child, is where repaying this debt can become unmanageable.

“Our Debt Advice Centres have experienced an increase in the number of people seeking our support. The research in our report shows a worsening of people’s debt, which paired with job losses or reduction in income, is putting them at real risk of poverty.

“Banks and credit-card companies will be forced to give much needed space to people struggling with debt and yet the Government can continue to take significant portions from people’s income without respite.

“The Government should be less focused on collecting money and instead help people manage their finances by highlighting the professional support available from debt support services.

“Whilst the Government has indicated that it is planning to include Advance Payments in the Debt Respite Scheme, owing to IT constraints, they will be included on a ‘phased basis’ and no specific timeframe has been given. The Salvation Army is concerned a significant delay means thousands will be pushed into debt before then.”